Capitalism is a great theory but not a reality in the US

Capitalism is a great economic system, especially if you are
one who has benefited by it. Most people have a reverence for it that is almost
religious. Unfortunately this reverence is similar to the reverence that used
to be given to the Bible by those who put it in a safe place in the house, not
to be touched or read.

What Adam Smith
described in the Wealth of Nations in
1776 is a free market that mostly consisted of many small entrepreneurs
providing a product or service. Often the family was integral to the operation
of this business. In this system workers were respected for the talents they
had because capitalism was undergirded by high moral principles and values.
Excessive profits were a detriment to the smooth operation of capitalism
according to Smith. Shortly after Smith published his book the industrial
revolution exploded. More and more small businesses were replaced with larger
ones until today the vestiges of the small family entrepreneurial operation
hardly exist. Even though most of the jobs in this country are provided by
small enterprises, our economic system is dominated by the large multinational
corporations that do not even resemble the capitalism Smith described in his
book.

This industrial
revolution changed the whole manner of competition, employment, and ownership. In
1886 the US Supreme Court ruled that a corporation was a legal person, using
the 14th Amendment as its basis for such an argument. (1) The
corporation had existed for many years but this decision allowed wealthy people
to engage in business ownership with limited liability and risk to their own
wealth. In the process corporations became very
entwined with government and capitalism, as envisioned by Smith, never came to
exist.

Employees

Capitalism
derives its name from the capital (wealth) which owners use to start and
maintain a business operation. Employees are an integral part of any business
unless of course the business is a one person operation. Employees are people,
not a resource like steel, oil or inventory. They need to be treated with
respect and dignity. They take a risk when they choose to work for a particular
company, expecting to receive the rewards of decent wages, benefits, and security
in exchange for their work and commitment to the company. This part is sadly overlooked or ignored in
our economic discussions. This is the reason for the emergence of labor unions.

Unions

Jim (not
his real name) and I had several email exchanges regarding capitalism. He
challenged me to come up with a better system than capitalism since I was
critical of its operation. Then he wrote about the good life capitalism has
brought him after retiring from Dow Chemical. He has enjoyed a good home,
vacations, and now “I am pretty much self sufficient and I do enjoy Social
Security and Medicare benefits.”

I responded,“Capitalism did not provide you the benefits
you listed – your employer did that…. the owners of business control what they
do, how much they pay themselves, and how much they pay their employees..” His
Social Security and Medicare are of course from the government, not his
employer.

Jim wrote, “the company is bound,
through collective bargaining with the union, to perform in an agreed upon system!
They cannot arbitrarily fire anyone without cause!”

I replied that he made my case very
well that capitalism and the free market do not work for the benefit of
employees. Unions are not part of capitalism. They were formed and legally
supported by government to force companies to be fair! A better system than
capitalism is a combination of capitalism and government involvement. That’s
what we have. Fine tuning the relationship is always necessary.

Conclusion

Jim is a
person who has railed against candidate and now President Obama while touting
the benefits of Social Security and Medicare as if they were products of his
own work and not government programs. He wrote he was a “self sufficient man”
without recognizing the benefits guaranteed through his labor union. None of
these sources of his security and self sufficiency he praises are aspects of
capitalism but rather government regulation of capitalism. It is important to
understand our economic system if we are to move forward without being hampered
by ignorance.

In 1886, . . . in the case of Santa Clara County v. Southern
Pacific Railroad Company, the U.S. Supreme Court decided that a private
corporation is a person and entitled to the legal rights and protections the
Constitutions affords to any person. Because the Constitution makes no mention
of corporations, it is a fairly clear case of the Court's taking it upon itself
to rewrite the Constitution.

Far more
remarkable, however, is that the doctrine of corporate personhood, which
subsequently became a cornerstone of corporate law, was introduced into this
1886 decision without argument. According to the official case record, Supreme
Court Justice Morrison Remick Waite simply pronounced
before the beginning of arguement in the case of
Santa Clara County v. Southern Pacific Railroad Company that

The court
does not wish to hear argument on the question whether the provision in the
Fourteenth Amendment to the Constitution, which forbids a State to deny to any
person within its jurisdiction the equal protection of the laws, applies to
these corporations. We are all of opinion that it does.

The court
reporter duly entered into the summary record of the Court's findings that

The
defendant Corporations are persons within the intent of the clause in section 1
of the Fourteen Amendment to the Constitution of the United States, which forbids a
State to deny to any person within its jurisdiction the equal protection of the
laws.

Thus it was
that a two-sentence assertion by a single judge elevated corporations to the
status of persons under the law, prepared the way for the rise of global
corporate rule, and thereby changed the course of history.

The doctrine
of corporate personhood creates an interesting legal contradiction. The
corporation is owned by its shareholders and is therefore their property. If it
is also a legal person, then it is a person owned by others and thus exists in
a condition of slavery -- a status explicitly forbidden by the Thirteenth
Amendment to the Constitution. So is a corporation a person illegally held in
servitude by its shareholders? Or is it a person who enjoys the rights of
personhood that take precedence over the presumed ownership rights of its
shareholders? So far as I have been able to determine, this contradiction has
not been directly addressed by the courts.